Monday, February 28, 2011

Know the Company before you invest

Seven years ago, Petronas published an ad at one of local news paper, looking for someone who interested to run a petrol station. So I applied for one too. After several interviews, finally I was told my application was rejected (due to government's policy, they are more encourage "bumi" to become partner with them, as one of the interviewer told me) One of my friend told me that time, "why so difficult go and apply, just buy their shares, since you know they going to expend their business, few years later, you might earn more than what you earn from a petrol station operator.  At that time, PetDag share price was around RM4.50, and today the price is RM13.++, after one round of one for one bonus issue. 

Let's do the calculation, with principal of RM150,000, bought PetDag shares at RM4.50, I can buy 33,300 shares. Today, after bonus issues, the total shares will become 66,600. With last Friday's closing price of RM13, the total market value is RM865,800, yet to include yearly dividend. That is RM102,000 per year or RM8500+ per month. This is actually better than operate a petrol station, unfortunately I did not invest into PetDag's share though I had study the company and know them well from management to financial result. Currently they are the top retail petrol station at Malaysia, after overtook Shell's position last year. 
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